Wednesday, September 8, 2010

Drilling moratorium may be more costly than oil spill

Economic researchers in Louisiana and Texas have been busy calculating the damage to the states’ economies caused by the Obama administration’s moratorium on deepwater drilling. It turns out that the economic impact to businesses and workers in both states may be more severe than the cost of the cleanup in the aftermath of the April 20 explosion and fire aboard the Deepwater Horizon drilling rig and the subsequent gusher of crude oil into the Gulf of Mexico. A small portion of that oil washed ashore on Louisiana beaches and marshes, and the spill shut down the fishing industry near the affected areas.

As costly as that has been (estimates range upward to several billion dollars), the long-term loss of jobs of offshore oil industry workers and the loss of business for related companies may be even worse, says a report by the Houston-based Institute for Energy Research.

More than 8,000 jobs and about $500 million in wages will be lost if the moratorium continues longer than six months, according to the report titled “The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region.” This will result in a total economic loss of about $2.1 billion to the area.

Joseph Mason, a professor at Louisiana State University in Baton Rouge, says that economic losses in Texas will be about $622 million, about half that of Louisiana. However, he says the data suggests that, “The moratorium could be more costly than the oil spill itself.”

There is no doubt that the oil spill will lead to tougher regulations on Gulf of Mexico drilling, and this may drive some drilling contractors and operators to other countries where the rules governing drilling aren’t as onerous to the petroleum industry. So the long-term loss of jobs and tax revenue from operators, industry vendors, and employees may be very detrimental to the economies in Louisiana and Texas.

One industry veteran told me recently, “We have come back from Katrina, from Gustav, from Ike, and from other natural disasters. However, I don’t know if the industry will ever recover if the government chases off [operators]. The oil and gas industry is the basis for our livelihood, and I don’t know what can take its place.”

The major Gulf of Mexico players like BP, Shell, Chevron, and others are large diversified corporations with worldwide operations. They will survive whatever the government throws at them. However, many of the independent operators that are focused almost exclusively on the Gulf may not. Neither will some of the family-owned and smaller suppliers to the offshore industry.

This is not obtuse economic theory. To those of us who live along the Gulf Coast, it is tangible and easy to understand. If the White House truly wants to turn the economy around and stop the loss of jobs, it must consider lifting the drilling moratorium immediately.

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1 Comments:

Blogger jcbmack said...

Where is the 2.1 billion dollar figure coming from? Is that combining the cost of the clean up and the job/wage loss? 500 million is far less than a couple billion.

September 8, 2010 at 4:49 PM  

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Blogger jcbmack said...
Where is the 2.1 billion dollar figure coming from? Is that combining the cost of the clean up and the job/wage loss? 500 million is far less than a couple billion.
September 8, 2010 at 4:49 PM  

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Friday, August 14, 2009

Will bearish gas market come back this year?

The North American gas market is suffering from oversupply and waning demand that have combined to keep natural gas prices low. Yet, despite this, there are several indications that prices may rally, although there is no consensus on this.

Crude oil prices have been hovering around $70 for some time, and at least one senior analyst, Darin Newsom with DTN, a market information service out of Omaha, Neb., says that oil may hit $90 before year-end.

Newsome added that even though oil has the potential to rise another $20, supply and demand fundamentals remain weak.

The EIA recently reported record-high gas storage. That, combined with robust production mainly from unconventional resource plays, will continue to depress the price of natural gas, the agency said.

In its August short-term energy outlook, the EIA projected a full-year average price of $3.92/MMBtu – a full 30 cents less than its previous forecast.

However, as the economy bounces back and the supply-and-demand dynamic starts to balance, the EIA expects the Henry Hub price to rise to an average of $5.48/Mcf next year.

The EIA said it expects storage inventories to set a record by the end of the injection season, reaching 3.8 tcf by the end of October, topping the record set in 2007 by 235 bcf.

Canada’s National Energy Board attributes current low gas prices to an expanded US natural gas pipeline network, higher LNG imports, and sluggish gas demand. The NEB says the low prices have put pressure on drilling activity since late last year, with Canadian drilling down about 60% and US activity down roughly 50%.

The NEB said it expects gas prices to hold at or below the $4/MMBtu level for the next few weeks at least.

What are your thoughts on natural gas prices and when you think the market will improve?

8 Comments:

Anonymous Anonymous said...

We have already seen $2.80 MMBTU recently. At least one new LNG receiving terminal is coming online in N America in the next couple months. We could max out on the injection fill this year whioch could trigger shut-ins in some regions. Barring a hurricane that modeartely affects the GOM I believe it is possible that we could see a $2.25-$2.40/MMBTU by the end of September. Even if we see that it should be short lived as the cooler weather kicks in.

Let's hope for an early cold fall!

August 30, 2009 at 3:52 PM  
Anonymous betty said...

Great site!!! Check it out-Google CEO Schmidt says punching down into the earth to capture natural and clean geothermal energy could help move the United States away from it's dependence on petroleum-Dec.16,2008-Betty http://www.geothermalquestions.net

September 16, 2009 at 12:06 PM  
Anonymous Anonymous said...

U.S. politics are going to play a factor in natural gas prices in medium and long term. If current administration weakens and fails to push thru any kind of meaningful cap and trade legislation, the recovery in gas prices will not be robust. However, if legislation passes that makes coal less attractive, we’ll see additional natural gas power generation and associated capital investment. We could see upside beyond current futures trading levels, regardless of the LNG regasification terminals that have come on line.

September 23, 2009 at 6:43 AM  
Anonymous Anonymous said...

I don't know. Niether does the EIA.
By the way, why are taxpayers paying the govt to set up a crystal ball department? oh, I forgot, under the new rules, the govt is running everything.

September 23, 2009 at 8:47 AM  
Anonymous Anonymous said...

Coal prices are generally higher than they were this summer... I hope (but I don't know) that lower natural gas prices lead to more use of gas in electric generation. In a sluggish economy that is going to get worse before it gets better (thanks to the liberals in charge) that appears to me to be our only chance of keeping gas prices out of the toilet.

March 2, 2010 at 5:11 AM  
Blogger Paul said...

From atop the Marcellus ... (Disclosure: I'm an individual investor in natural gas-related companies.) "Hydraulic fracturing is safe," is one of the repeated talking points of the natgas producers. Another is, "Imposing EPA restrictions will cause an unnecessary financial burden on exploration and production." Hey, here's a news flash: Repeating the talking points doesn't change reality. Unless the natural gas boosters want to drive the country toward using armed eminent domain to secure these resources, it would be wise to look at the facts. Instead of resisting and denying, why not create the Bell Labs of natural gas? Let's get real science to solve these solvable problems. If the natural gas industry doesn't embrace its responsibility, at best we can expect further delays and regulation.

March 16, 2010 at 10:07 AM  
Blogger Not1Not2 said...

Qatar and Russia have agreed to limit supply so LNG will be limited. Coal prices will support HH close to $5 per MMBtu. The key is weather and hurricanes but production is growing very rapidly and will continue to do so with the growth in horizontal rigs. So depending on weather, there is a great deal of potential for a return to a soft market. The big question is timing.

June 22, 2010 at 5:41 AM  
Blogger Not1Not2 said...

Natural gas production has been growing at close to 1% per month through July and the horizontal rig count sets new records each month. We predicted $4.75 for 2011 last month when Henry Hub was at $5.30 and we think $4 is very possible next year.

Ron Denhardt
VP EnergySeer.com

August 10, 2010 at 4:01 PM  

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8 Comments:
Anonymous Anonymous said...
We have already seen $2.80 MMBTU recently. At least one new LNG receiving terminal is coming online in N America in the next couple months. We could max out on the injection fill this year whioch could trigger shut-ins in some regions. Barring a hurricane that modeartely affects the GOM I believe it is possible that we could see a $2.25-$2.40/MMBTU by the end of September. Even if we see that it should be short lived as the cooler weather kicks in.

Let's hope for an early cold fall!
August 30, 2009 at 3:52 PM  

*/ ?>
Anonymous betty said...
Great site!!! Check it out-Google CEO Schmidt says punching down into the earth to capture natural and clean geothermal energy could help move the United States away from it's dependence on petroleum-Dec.16,2008-Betty http://www.geothermalquestions.net
September 16, 2009 at 12:06 PM  

*/ ?>
Anonymous Anonymous said...
U.S. politics are going to play a factor in natural gas prices in medium and long term. If current administration weakens and fails to push thru any kind of meaningful cap and trade legislation, the recovery in gas prices will not be robust. However, if legislation passes that makes coal less attractive, we’ll see additional natural gas power generation and associated capital investment. We could see upside beyond current futures trading levels, regardless of the LNG regasification terminals that have come on line.
September 23, 2009 at 6:43 AM  

*/ ?>
Anonymous Anonymous said...
I don't know. Niether does the EIA.
By the way, why are taxpayers paying the govt to set up a crystal ball department? oh, I forgot, under the new rules, the govt is running everything.
September 23, 2009 at 8:47 AM  

*/ ?>
Anonymous Anonymous said...
Coal prices are generally higher than they were this summer... I hope (but I don't know) that lower natural gas prices lead to more use of gas in electric generation. In a sluggish economy that is going to get worse before it gets better (thanks to the liberals in charge) that appears to me to be our only chance of keeping gas prices out of the toilet.
March 2, 2010 at 5:11 AM  

*/ ?>
Blogger Paul said...
From atop the Marcellus ... (Disclosure: I'm an individual investor in natural gas-related companies.) "Hydraulic fracturing is safe," is one of the repeated talking points of the natgas producers. Another is, "Imposing EPA restrictions will cause an unnecessary financial burden on exploration and production." Hey, here's a news flash: Repeating the talking points doesn't change reality. Unless the natural gas boosters want to drive the country toward using armed eminent domain to secure these resources, it would be wise to look at the facts. Instead of resisting and denying, why not create the Bell Labs of natural gas? Let's get real science to solve these solvable problems. If the natural gas industry doesn't embrace its responsibility, at best we can expect further delays and regulation.
March 16, 2010 at 10:07 AM  

*/ ?>
Blogger Not1Not2 said...
Qatar and Russia have agreed to limit supply so LNG will be limited. Coal prices will support HH close to $5 per MMBtu. The key is weather and hurricanes but production is growing very rapidly and will continue to do so with the growth in horizontal rigs. So depending on weather, there is a great deal of potential for a return to a soft market. The big question is timing.
June 22, 2010 at 5:41 AM  

*/ ?>
Blogger Not1Not2 said...
Natural gas production has been growing at close to 1% per month through July and the horizontal rig count sets new records each month. We predicted $4.75 for 2011 last month when Henry Hub was at $5.30 and we think $4 is very possible next year.

Ron Denhardt
VP EnergySeer.com
August 10, 2010 at 4:01 PM  

*/ ?>
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Friday, June 26, 2009

Hydraulic fracturing legislation not needed

A new report from the Colorado School of Mines’ Potential Gas Committee concludes that the United States is sitting atop natural gas reserves much larger than previously thought – more than 2,000 tcf, according to the committee, or nearly 100 years worth of production.

This expanded forecast is due mainly to the discoveries of large reserves of gas in America’s shale regions, including the Marcellus in Northern Appalachia, the Barnett in North Texas, the Woodford in Oklahoma, the Fayetteville in Arkansas, the Haynesville in Louisiana and Texas, and several others. The upward revision represents the largest jump in resource estimates in the 44-year history of the report.

Unfortunately, we may not be able to recover much of this newly discovered clean-burning natural gas. In a move that studies suggest could result in thousands of lost jobs, billions in taxpayer revenue, and massive amounts of energy left in the ground, Congress has introduced legislation that, if passed, will impose new restrictions on a safe and commonly used recovery technique known as hydraulic fracturing, which is a critical well stimulation technology.

Hydraulic fracturing has been used for more than 60 years to access and increase oil and gas production of resources that otherwise would have remained trapped under miles of rock. It’s also been regulated by state agencies for at least that long.

Now, members of Congress who apparently believe that hydraulic fracturing is unsafe and unregulated want to require the U.S. Environmental Protection Agency to regulate hydraulic fracturing as a form of underground injection under the Safe Drinking Water Act.

Doing so would place an unnecessary financial burden on a critical American industry without any tangible environmental benefit. Hydraulic fracturing has been aggressively regulated by the states and the process has an impressive record of safety and performance. Imposing an additional burden on companies that employ the technique could conceivably result in the loss of thousands of jobs, billions of dollars in taxpayer revenue, and leave massive amounts of energy in the ground.

Your thoughts….

5 Comments:

Anonymous Anonymous said...

Mr. Don Stowers

I am from Venezuela and have been working in the oil and gas Ind. for 30 years. I am not sure if HF is so sure that does not need more regulations. We have had some fails producing contamination of sweet waters with slated and oily waters. Actually here, there is not any regulation about HF, if we would have some, probably it could be avoided.
So, because, in the future war (cold or hot) will be for water not for oil, I think that this has to be faced with strong limits from now on.
Thanks.
Alfredo Pérez

July 7, 2009 at 2:46 PM  
Anonymous Anonymous said...

There is no doubt that fracing is an environmental hazard, it is an economic burden and it is an umpredictable technology that often causes unwanted fluids. Currently there are no other ways to achieve the productivity.

It is also the backbone of Schlumberger, Halliburton, BJ and many others. They will fight against it. I know, because I have implemted and driven a technology, more successful and profitable than the existing technologies, but they fight it like hell.

The legislation, is a question of telling the government what are in the slurries. That would not be such a big problem to tell them. Guars, polymers, straight water. There are generally no big secrets out there. Everybody uses the same chemicals. In Europe they had to tell anyway, so if Halliburton wanted to know what cemicals Sclumberger uses in Clearfrac, they only have to call their european offices; no big deal. Secondly I would say now is the time to innovate. I am sure most americans would say that there is no replacement for fracking particularily in tight gas. So as an industry we need to innovate and adapt to the society, not tell them it is too expensive. If it is too expensive for the industry to behave like a responsible citizen, then it is time for the industry to innovate or die.

July 21, 2009 at 5:00 AM  
Anonymous Anonymous said...

In my experience, the states have tight enough regulations on HF already.

July 21, 2009 at 12:29 PM  
Blogger SMrF said...

"Unfortunately, we may not be able to recover much of this newly discovered clean-burning natural gas."

Is this because regulation of any sort will make drilling uneconomical, that studies will find fracturing so dangerous as to not be viable, or is this just a polarizing statement?

May 20, 2010 at 10:12 AM  
Anonymous Anonymous said...

I am in the business of monitoring and mapping hydraulic fracturing. Measurements on thousands of fracs show that the hydraulically induced fractures are invariably closely contained in or near the intended producing interval and remain thousands of feet (typically a mile or more)below drinking water aquifers so there is a physical barrier of thousands of feet of impermeable rock between the fractures and the water supplies that we want to protect.

Additionally, although the frac pumping companies prefer not to list their proprietary blends of chemicals, as one of your commentators says "Guars, polymers, straight water. There are generally no big secrets out there." The majority of the chemicals are used in things like ice cream and cosmetics and are so diluted in the thousands of gallons of water used that they could be safely injested in the concentrations being pumped. Additionally, they will be further diluted in the reservoir after pumping.

June 22, 2010 at 6:04 AM  

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5 Comments:
Anonymous Anonymous said...
Mr. Don Stowers

I am from Venezuela and have been working in the oil and gas Ind. for 30 years. I am not sure if HF is so sure that does not need more regulations. We have had some fails producing contamination of sweet waters with slated and oily waters. Actually here, there is not any regulation about HF, if we would have some, probably it could be avoided.
So, because, in the future war (cold or hot) will be for water not for oil, I think that this has to be faced with strong limits from now on.
Thanks.
Alfredo Pérez
July 7, 2009 at 2:46 PM  

*/ ?>
Anonymous Anonymous said...
There is no doubt that fracing is an environmental hazard, it is an economic burden and it is an umpredictable technology that often causes unwanted fluids. Currently there are no other ways to achieve the productivity.

It is also the backbone of Schlumberger, Halliburton, BJ and many others. They will fight against it. I know, because I have implemted and driven a technology, more successful and profitable than the existing technologies, but they fight it like hell.

The legislation, is a question of telling the government what are in the slurries. That would not be such a big problem to tell them. Guars, polymers, straight water. There are generally no big secrets out there. Everybody uses the same chemicals. In Europe they had to tell anyway, so if Halliburton wanted to know what cemicals Sclumberger uses in Clearfrac, they only have to call their european offices; no big deal. Secondly I would say now is the time to innovate. I am sure most americans would say that there is no replacement for fracking particularily in tight gas. So as an industry we need to innovate and adapt to the society, not tell them it is too expensive. If it is too expensive for the industry to behave like a responsible citizen, then it is time for the industry to innovate or die.
July 21, 2009 at 5:00 AM  

*/ ?>
Anonymous Anonymous said...
In my experience, the states have tight enough regulations on HF already.
July 21, 2009 at 12:29 PM  

*/ ?>
Blogger SMrF said...
"Unfortunately, we may not be able to recover much of this newly discovered clean-burning natural gas."

Is this because regulation of any sort will make drilling uneconomical, that studies will find fracturing so dangerous as to not be viable, or is this just a polarizing statement?
May 20, 2010 at 10:12 AM  

*/ ?>
Anonymous Anonymous said...
I am in the business of monitoring and mapping hydraulic fracturing. Measurements on thousands of fracs show that the hydraulically induced fractures are invariably closely contained in or near the intended producing interval and remain thousands of feet (typically a mile or more)below drinking water aquifers so there is a physical barrier of thousands of feet of impermeable rock between the fractures and the water supplies that we want to protect.

Additionally, although the frac pumping companies prefer not to list their proprietary blends of chemicals, as one of your commentators says "Guars, polymers, straight water. There are generally no big secrets out there." The majority of the chemicals are used in things like ice cream and cosmetics and are so diluted in the thousands of gallons of water used that they could be safely injested in the concentrations being pumped. Additionally, they will be further diluted in the reservoir after pumping.
June 22, 2010 at 6:04 AM  

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Saturday, April 25, 2009

A bearish market for natural gas

The head of Mercator Energy, a Rockies drilling company, recently predicted “massive drilling curtailments” this summer due to a continuing “glut” of natural gas supplies, which will soon include large volumes of LNG scheduled to arrive in the United States at about the same time that gas storage capacity begins to fill up.

Mercator’s John Harpole, speaking at an oil and gas conference in Denver, said that a number of factors are contributing to the oversupply problems. First, at the current injection rate, he noted that storage facilities will be nearing capacity limits by late summer, which means the already saturated market will be flood with gas. In addition, Harpole said that LNG imports have increased more than 200% year over year as of early April. This, he said, could result in “massive shut-ins” as natural gas prices plummet lower and lower. Producers around the country will see this as a signal and will begin shutting in production, he added.

On the positive side, it was noted that there has been a 225% rise in gas-fired electric power generation since 1996, while coal-fired generation has remained fairly static during this time. Nuclear and hydroelectric power generation haven’t changed much either. Renewable energy, especially wind power, has risen significantly during the past decade but still remains a relatively small part of the total energy mix. In electric power generation, natural gas still affords the greatest opportunity for growth and increased market share.

Therefore, say many analysts, the long-term outlook for natural gas looks good, but in the short term, oversupply will lead to lower prices and further production cutbacks.

What’s your take on this? How low will natural gas prices drop this summer?

posted by Don Stowers at 4 Comments

4 Comments:

Anonymous Anonymous said...

Are you nuts? Bearish is an understatement.

May 19, 2009 at 1:51 PM  
Anonymous Walter Breidenstein said...

I would suggest those who are going to shut-in production think about our new technology to convert that natural gas to methanol here in the USA. www.gastechno.com

The time has come for American natural gas producers to consider offsetting our 98% imports of methanol with domestic production.

June 11, 2009 at 5:48 AM  
Anonymous Ashish said...

Welcome to Internet Financial Service Database
Your trusted and comprehensive resource for locating financial services nationwide that can help you with all your financial needs.

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Financial Services

December 4, 2009 at 6:25 AM  
Anonymous Anonymous said...

The huge reserves of natural gas almost demand congressional action. By giving tax relief to those power plants who switch to natural gas we would eventually eliminate the need for importing.

October 7, 2010 at 9:26 AM  

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4 Comments:
Anonymous Anonymous said...
Are you nuts? Bearish is an understatement.
May 19, 2009 at 1:51 PM  

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Anonymous Walter Breidenstein said...
I would suggest those who are going to shut-in production think about our new technology to convert that natural gas to methanol here in the USA. www.gastechno.com

The time has come for American natural gas producers to consider offsetting our 98% imports of methanol with domestic production.
June 11, 2009 at 5:48 AM  

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Anonymous Ashish said...
Welcome to Internet Financial Service Database
Your trusted and comprehensive resource for locating financial services nationwide that can help you with all your financial needs.

________
Ashish


Financial Services
December 4, 2009 at 6:25 AM  

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Anonymous Anonymous said...
The huge reserves of natural gas almost demand congressional action. By giving tax relief to those power plants who switch to natural gas we would eventually eliminate the need for importing.
October 7, 2010 at 9:26 AM  

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Wednesday, March 11, 2009

Budget proposal is harmful

The Independent Petroleum Association of America rarely gets this upset about a new government policy. However, on Feb. 26, the Obama administration delivered a body blow to the industry when it proposed a colossal $30 billion tax increase (as part of the 2010 budget) on US energy producers. IPAA management and staffers were livid that the President would attempt to derail domestic oil and natural gas production at a time when the economy is in shambles and the country is importing more and more of its energy needs.
So much for energy independence.

There is faint hope that Congress will modify the proposed budget and remove some of the more loathsome provisions. However, any such changes would have to come in the Senate because the House leadership likely helped craft the budget proposal or at least contributed in some way to the anti-oil tax provisions.

The IPAA exists to help protect the interests of independent oil and gas producers – not so-called Big Oil, but the many small- and mid-sized companies that drill roughly 90% of the nation’s oil and natural gas wells. These companies produce 68% of American oil and 82% of our natural gas supplies, and in case the government hasn’t noticed, they are suffering along with the rest of America in the current economic turmoil.

A tax increase such as the administration has proposed would have a devastating effect on US producers, and it would run counter to the needs of the country. It could shut down thousands of domestic oil and gas wells and increase the need for imports. The government would ultimately lose much more in tax and royalty revenues than it would gain by such a proposal, and the loss of jobs would be catastrophic in petroleum-producing states. With the current unemployment rate at its highest level in years, this could not come at a worse time.

Without going into too much detail, here are some of the items in the budget proposal:

* Repeals expensing of intangible drilling costs (fuel, repairs, etc.);
* Repeals percentage depletion (without this provision, many small, barely economic wells will be shut down);
* Repeals marginal well tax credit (an important safety net);
* Repeals enhanced oil recovery credit;
* Eliminates expensing of geological and geophysical amortization costs;
* Imposes an excise tax on Gulf of Mexico production; and
* Repeals manufacturing tax deduction for oil and gas industry, a provision that is allowed other US manufacturers.


It is worth noting that this budget proposal slams the petroleum industry at the same time that Interior Secretary Ken Salazar has decided to cancel the planned oil shale lease sale. An earlier government study revealed that nearly 800 billion barrels of crude oil lay untapped in oil shale deposits in several Western states, and now it appears that they will remain unexploited.
In a conference call announcing the cancellation, Salazar commented: “Those who believe oil shale is a panacea for America’s energy needs have been living in a fantasy land.”

To that I would say: those who believe that alternative energy alone can fuel our vehicles, heat and cool our homes and businesses, and provide the necessary energy for American industry to thrive have followed Alice down the rabbit hole. This kind of thinking will cripple our energy infrastructure.

Earlier this year, Salazar said his office would “rework” the five-year offshore oil and gas leasing plan that proposed opening up parts of the Outer Continental Shelf, which have been closed to hydrocarbon development for decades. I can hardly wait to see the revised proposal.
Writing in the Wall Street Journal recently, BP CEO Tony Hayward noted that America needs to stop looking to others for its energy needs and develop its own hydrocarbon endowment. He said, “Even with the rapid growth of alternatives, fossil fuels will continue providing most of the energy Americans consume for decades to come.”

Oil imports, said Hayward, have more than doubled in the past 35 years – from 30% in 1973 to around 65% today. This figure needs to get smaller – not bigger.

With declining energy demand due to the recession, Hayward noted that now is the ideal time for Congress and the Obama administration to work with energy producers to craft an energy policy that creates jobs, expands and diversifies the nation’s energy supply, generates government revenue, and protects the environment.

We agree. Unfortunately, the current budget proposal is a step in the wrong direction.

posted by Don Stowers at 4 Comments

4 Comments:

Anonymous Tony said...

Tony Says:

March 24th, 2009
Its about time the USA made plans to get there own “back yard” in order. Be independent.

May 7, 2009 at 1:08 PM  
Anonymous A. Evangelista said...

March 24th, 2009

Dear API, NPRA, IPAA, (and OGFJ) - what did you think? It is clear that your perspective is that this $30 Billion tax increase was an entitlement. You forget how the rest of America views it - as a $30 Billion Dollar Tax CUT that has enriched the oil, gas, exploration, and petroleum production sectors. Having spent 15 years in oil refining, and once been “Pro-Oil”, I’m now sickened by the stance of the API and large oil conglomerates who have done nothing to advance American energy independence and sustained consumption. It doesn’t just anger me. It infuriates!!! We Americans have to buy over 60% of our petroleum from foreign sources, many sources of which are openly hostile towards American interests. The American consumer has been fooled into consuming oil and gas without thought or consequence to US National Security and American Sovereignty. We’ve got a rope around our necks unless we find a solution.

I am now openly hostile towards the API and similar organizations that don’t realize that these past policies and corporate practices DO NOT CONTRIBUTE TO THE NATIONAL SECURITY AND SOVEREIGN INTEGRITY OF AMERICA.

WHY? I was once Gung-Ho for petroleum and US Oil, Gas, and Refining. For 14 years, I worked hard in the industry for a reputable refiner, which by the way is owned by PDVSA (can you guess who?). But the day soon came when I decided I was never going to pour any more “blood, sweat, and tears” for a company whose owner was a fiercely anti-American lunatic (Hugo Chavez). It was just damn “un-American”!!! Why should I work hard for a company owned by a fiercely anti-American regime? Just plain and simple S-T-U-P-I-D. Sadly, the 5000 US employees of this company who have a voice are likely at odds with this issue. Trully, many feel they have no choice because they need the job, like I once did. But many employees of Citgo are either just plain ignorant of the issues, or choose to ignore it.

I’ve come to realize that US Oil and Gas interests care about one thing. Its not the people and employees, or the company, or the country. Its all about the oil, every single drop of it.

I welcome the $30 Billion “tax increase”. It is in reality a long-standing $30 Billion industry kickback. When John McCain stated last year that the solar and renewable/sustainable energy industries shouldn’t be entitled to government tax incentives, rebates, and advantaged funding, little did he know that all along HIS government was giving away $30 Billion to a long-established matured oil and gas industry.

May 7, 2009 at 1:09 PM  
Anonymous semperpax said...

March 30th, 2009

Are there any grown-ups in Washington?

May 7, 2009 at 1:10 PM  
Anonymous Anonymous said...

I am part of a second generation oil and gas production company. My father started it from scratch and raised a family and sent two kids to college on a salary of $40,000 a year. Not exactly bloodsucking as a previous post phrased it. He put his blood sweat and tears into this company. He's seen prices fluctuate dramatically several times. Our company now supports four families, and provides part time income for two more. Our wells are all marginal and will likely be shut in with the new tax laws. That's four families without a source of income. Small but important.

May 27, 2009 at 9:52 AM  

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4 Comments:
Anonymous Tony said...
Tony Says:

March 24th, 2009
Its about time the USA made plans to get there own “back yard” in order. Be independent.
May 7, 2009 at 1:08 PM  

*/ ?>
Anonymous A. Evangelista said...
March 24th, 2009

Dear API, NPRA, IPAA, (and OGFJ) - what did you think? It is clear that your perspective is that this $30 Billion tax increase was an entitlement. You forget how the rest of America views it - as a $30 Billion Dollar Tax CUT that has enriched the oil, gas, exploration, and petroleum production sectors. Having spent 15 years in oil refining, and once been “Pro-Oil”, I’m now sickened by the stance of the API and large oil conglomerates who have done nothing to advance American energy independence and sustained consumption. It doesn’t just anger me. It infuriates!!! We Americans have to buy over 60% of our petroleum from foreign sources, many sources of which are openly hostile towards American interests. The American consumer has been fooled into consuming oil and gas without thought or consequence to US National Security and American Sovereignty. We’ve got a rope around our necks unless we find a solution.

I am now openly hostile towards the API and similar organizations that don’t realize that these past policies and corporate practices DO NOT CONTRIBUTE TO THE NATIONAL SECURITY AND SOVEREIGN INTEGRITY OF AMERICA.

WHY? I was once Gung-Ho for petroleum and US Oil, Gas, and Refining. For 14 years, I worked hard in the industry for a reputable refiner, which by the way is owned by PDVSA (can you guess who?). But the day soon came when I decided I was never going to pour any more “blood, sweat, and tears” for a company whose owner was a fiercely anti-American lunatic (Hugo Chavez). It was just damn “un-American”!!! Why should I work hard for a company owned by a fiercely anti-American regime? Just plain and simple S-T-U-P-I-D. Sadly, the 5000 US employees of this company who have a voice are likely at odds with this issue. Trully, many feel they have no choice because they need the job, like I once did. But many employees of Citgo are either just plain ignorant of the issues, or choose to ignore it.

I’ve come to realize that US Oil and Gas interests care about one thing. Its not the people and employees, or the company, or the country. Its all about the oil, every single drop of it.

I welcome the $30 Billion “tax increase”. It is in reality a long-standing $30 Billion industry kickback. When John McCain stated last year that the solar and renewable/sustainable energy industries shouldn’t be entitled to government tax incentives, rebates, and advantaged funding, little did he know that all along HIS government was giving away $30 Billion to a long-established matured oil and gas industry.
May 7, 2009 at 1:09 PM  

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Anonymous semperpax said...
March 30th, 2009

Are there any grown-ups in Washington?
May 7, 2009 at 1:10 PM  

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Anonymous Anonymous said...
I am part of a second generation oil and gas production company. My father started it from scratch and raised a family and sent two kids to college on a salary of $40,000 a year. Not exactly bloodsucking as a previous post phrased it. He put his blood sweat and tears into this company. He's seen prices fluctuate dramatically several times. Our company now supports four families, and provides part time income for two more. Our wells are all marginal and will likely be shut in with the new tax laws. That's four families without a source of income. Small but important.
May 27, 2009 at 9:52 AM  

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Wednesday, February 11, 2009

How full is the energy glass?

Amid all the gloom and doom reporting about the economy and financial markets in the news media, a friend sent me an energy market assessment by Michael Smolinski, an industry analyst with Phoenix-based Energy Directions Inc. and a well-respected contrarian. In his analysis, Smolinski points to a number of factors that may indicate that:

a) the economy is stronger than we think; and
b) the situation is starting to improve already.

Although headlines are pointing out that unemployment has reached its highest mark in 26 years, they fail to mention that the US population was about 232 million then – 72 million fewer than today’s population. So, obviously, there are a lot more people gainfully employed today than there were in 1983. People are still working, consuming, using up, and wearing things out, says Smolinski.

Another sign that things may be on the upswing is electricity generation. For the last week of January, our nation’s power producers generated 81.253 billion kilowatt hours of electricity. That is nearly 25% greater than the same week last year and second only to the record of 83.459 needed two years ago.

Natural gas inventory is also on the decline, which if it continues, should foreshadow an increase in prices, which would be great news for hard-hit producers. Smolinski points out that Canada, our largest source of imported natural gas, is using more gas and supplying less of it to US markets.

Finally, our friend Allen Brooks over at Parks Paton Hoepfl & Brown recently said that he believes this energy downturn may be more like the 2001-2002 market correction rather than the 1980s energy bust. It’s a disservice to explain his theory and his rationale in a few short sentences (read his “Musings from the Oil Patch” dated Feb. 3 for a more thorough explanation), but Brooks notes the current downturn has seen 516 rigs idled so far, which represents a 25% retrenchment.

If this downturn were to match the 2001 decline, there would be another 357 rigs yet to be idled. This would be a net loss of 873 rigs from the rig count that peaked at 2031 active rigs last fall. This decline matches pretty closely the 2001 decline and that forecast by Nabors Industries late last fall as well as Brooks own forecast in November.

What do you think? Is the energy glass half full or half empty?

posted by Don Stowers at 0 Comments

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Tuesday, December 9, 2008

Investing in energy is patriotic

For years, the US government has paid lip service to “energy independence” and “energy security.” This has amounted to a token acknowledgement that the United States has become too dependent on foreign sources of energy for its own good. We need more than tokenism from the new administration that takes control in Washington on Jan. 20. The government needs to allocate resources to actually doing something about the problem.

First, one of the things the Obama administration can do that won’t cost the taxpayers a dime is to allow drilling in areas that have been off-limits for years, including federal lands in the West and in offshore areas that heretofore have been off limits to oil companies. This would be a good start.

Next, the government needs to encourage investment in emerging technologies for all forms of energy – petroleum, coal, nuclear, hydroelectric, wind and solar, tidal and wave energy, and biofuels – with government-guaranteed loans, if necessary. This may include public-private cooperation in building nuclear power plants and in developing zero-emissions coal-fired plants. We need to encourage American ingenuity so that we don’t fall behind other nations.

Government policies have helped destroy much of the manufacturing base in the United States, so it behooves us to make up for this by shoring up our reputation as the high-tech capital of the world. With many traditional investors weakened by the strongest economic recession since the 1930s, it’s time for the government to step up to the plate and help out by investing in our energy future.

It’s also appropriate at this time to express thanks to the President-elect for backing down from his earlier view that a new Windfall Profits Tax is needed due to “excessive” oil and gas profits. Obviously the excessive stage is over and much of the industry is now in a survival mode.

posted by Don Stowers at 1 Comments

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Blogger Don Stowers said...

Sami JR Says:

January 13th, 2009
I fully agree with your call and waiting for the true changes to take place, ASAP.
I am indeed, in need to help my Saudi side Oil & Gas Production via in housing more technology items services and products!
But, one hand can,t shake, though, in order to have a fruitfull change we need a sort of glabal business market changes as well!

Sami JR
Saudi TEE, CEO

May 7, 2009 at 12:53 PM  

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Blogger Don Stowers said...
Sami JR Says:

January 13th, 2009
I fully agree with your call and waiting for the true changes to take place, ASAP.
I am indeed, in need to help my Saudi side Oil & Gas Production via in housing more technology items services and products!
But, one hand can,t shake, though, in order to have a fruitfull change we need a sort of glabal business market changes as well!

Sami JR
Saudi TEE, CEO
May 7, 2009 at 12:53 PM  

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